The Fish That Ate the Whale
'The Fish That Ate the Whale' is an elegantly written cautionary tale about how hubris can destroy a powerful company.
Georges Doriot, the eminent Harvard Business School professor and widely acknowledged “father of venture capital,” had an annual ritual: He would have his students examine a Boston business directory from 100 years prior and then ask them how many of those businesses were still in operation. Invariably, the response ranged from few to none. It was a sobering introduction to the ephemeral nature of even the most well-known and powerful American companies. In Rich Cohen’s wonderful The Fish That Ate the Whale, we are introduced to just such a vanishing corporation, United Fruit Company, and its peripatetic and hyper-focused leader, Samuel “Sam the Banana Man” Zemurray.
Cohen, author of the best-selling "Tough Jews" and "Sweet and Low," has exhaustively researched Zemurray, a Russian émigré who arrived in New York City in 1891 with hardly a cent to his name and who, through hard work, ambition – and not a little luck – rose to become head of United Fruit for approximately 25 years, from the early 1930s through the 1950s. Cohen describes the young Zemurray as "hardened as the men in Walker Evans’ photos, a tough operator, a dead-end kid” – a scrappy worker who demonstrated that one didn’t need to be a Rockefeller to understand the basics of success: start at the bottom, fight your way to the top.
Zemurray emigrated to Alabama shortly after arriving in America, first to Selma, where he worked in his uncle’s store, and shortly thereafter to Mobile. He laid eyes on his first banana on the Mobile docks in 1893, and was quick to carve out a niche for himself in the field peddling “ripes”: bananas that were days from expiring, which the bigger companies like United Fruit considered worthless. Zemurray was both highly aggressive and observant in plying his trade – he was fond of quoting “There is no problem you can’t solve if you understand your business from A to Z” – and by the time he was 21, he was selling nearly 600,000 bananas a year and was essentially a millionaire.
His labors came to the attention of Andrew Preston, the president of United Fruit, who came to Mobile in 1903 and met with Zemurray, caling him "a risk taker ... thinker and a doer.” Preston signed a contract with Zemurray giving the young “fruit jobber” the rights to United Fruit’s ripes. At this point Cohen likens Zemurray to “a bike racer riding in the windbreak of a semitruck – the semitruck being United Fruit” and adds that, “If he had stopped there, his would have been a great success story.”
United Fruit’s march to prominence – and monopoly – was due to the efforts of three men: New Englander Lorenzo Baker, who developed banana fields in Central and South America; Boston Fruit’s Andrew Preston; and Brooklyn-born Minor Keith, who constructed the first cross-Panama railroad and planted the first banana “rhizomes” in the region. In 1899, Baker, Preston, and Keith sealed a partnership that created United Fruit. Zemurray, as he moved into the business, joined forces with Mobile native Ashbell Hubbard, who had his own contract with United Fruit. Together, with Zemurray’s $20,000 investment, the two men acquired two smaller companies, Cuyamel Fruit Co., and Thatcher Brothers, the latter of which provided the new enterprise with steamships. This put the young company squarely in United Fruit’s crosshairs, and, as Cohen makes clear, the emerging colossus dealt with competitors in only two ways: “absorb or crush.” Zemurray was not about to be crushed.
Having moved to New Orleans in 1905, four years before United Fruit would win a Supreme Court case alleging that they had violated the Sherman Antitrust Act, Zemurray met Jake “The Parrot King” Weinberger, an itinerant merchant who had extensive knowledge of Central America. (Zemurray would later marry Jake’s daughter Sarah). In 1910, Zemurray traveled to Honduras, where he bought 5,000 acres of land and met “characters” such as fugitive Texas embezzler William Sidney Porter (the author O. Henry). Zemurray found he was easily able to “grease the skids” of his enterprise by bribing officials of the heavily indebted Dávila government and by paying for Washington lobbyists to kill a plan by US Secretary of State Philander Knox to place a duty on all imports, bananas included.
Finally Zemurray decided to quietly overthrow the Honduran government. The new leader, General Manuel Bonilla, gave Zemurray essentially a free hand in expanding his business interests in the country.
The inevitable “banana war,” as Cohen describes it, pitted Zemurray, the “gringo” who rode with the roughnecks of the isthmus, against the starch-collared Brahmins of Boston of United Fruit, who seemed to operate from another planet. They sought to cut off Zemurray’s supply chain but, seeing that Zemurray was unrelenting, they arrived at a deal, brokered by United Fruit board member Bradley Palmer, that offered Zemurray 300,000 shares of United Fruit stock to leave the banana trade. Zemurray accepted but – still volatile, restless, and driven – he was nowhere near ready to relax and rest on his laurels. As Cohen sums up his world view: “Show me a happy man, and I will show you a man who is getting nothing accomplished in the world.”
The board of United Fruit were from Boston’s business elite. They had little use for this hard-headed and raving Russian. Zemurray, seeing the value of his United Fruit stock dwindle from $30 million initially to $3 million in 1932, spent the months before United Fruit's January, 1933, board meeting secretly gathering voting proxies against the United Fruit board. At that winter’s meeting, Zemurray made a personal appeal, saying the board had continually ignored his advice. At the end of it, board chairman Daniel Gould Wing sneered at him, saying, “Unfortunately, Mr. Zemurray, I can’t understand a word of what you say.” Zemurray then angrily left the room and returned with the large sack of proxies, which he threw on the table, saying “You're fired! Can you understand that, Mr. Chairman?” In the Central American isthmus, the demoralized population viewed Zemurray’s ascent to the head of United Fruit as a godsend. But Boston’s anti-Semetic gentry had reserved one last insult. As a Jew, Zemurray was essentially blackballed in the city, and when homeowners wouldn’t sell to him, he gave up, taking an apartment in the Ritz Carlton instead.
Now a powerful man, Zemurray, concerned about Adolf Hitler’s atrocities against the Jewish people, used his considerable wealth and other resources to help establish a Jewish foothold in Israel. Cohen makes clear that Zemurray, although not exactly an observant Jew, acted decisively and forthrightly when asked to help. Citing his World War II efforts, Cohen says Zemurray “involved himself in the war effort as much as possible, volunteered, hosted, contributed... [did] everything but fight, and would have done that, if not for his advancing years.”
After the war, both the political landscape and United Fruit’s swelling size changed the Central American isthmus. Cohen asserts, “By 1942, the company owned 70 percent of all private land in Guatemala, controlled 75 percent of all trade, and owned most of the roads, power stations and phone lines, the only Pacific seaport and every mile of railroad.” Guatemala’s people had had enough and were inflamed with desire to end the brand of colonialism and racism they associated with United Fruit. In 1951, charismatic revolutionary leader Jacobo Arbenz assumed Guatemala’s presidency and one year later signed “Decree 900,” which gave the government the right to appropriate hundreds of thousands of acres of United Fruit property which was distributed among Guatemalan peasants.
Zemurray was incensed and used every device at his disposal – the Central Intelligence Agency, the press, and even the “Father of Public Relations,” Edward Bernays – to undermine Guatemalan resistance efforts. The CIA targeted Arbenz with their "Operation Success" and by 1954 Arbenz was gone with nary a struggle.
But the political backlash in America following “Operation Success” was swift and powerful. It was widely reported that the campaign to overthrow Arbenz was mounted chiefly for economic reasons, and for one company in particular: United Fruit. The Justice Department now had the leverage to descend upon United Fruit’s monopoly as never before, and in 1958, the company signed a consent decree with the government that effectively sealed its demise. Its profits dried up, and parts of it were sold off to companies such as Dole and Del Monte.
It was an unseemly and devastating defeat for Zemurray. By 1960 this figure of large build, dominating personality, and boundless energy was a broken man who lingered in coffee shops in New Orleans’ French Quarter, “an old man with his buttermilk and Times-Picayune.” Cohen’s masterful and elegantly written account of Zemurray and the corporation he built is a cautionary tale for the ages: how hubris can destroy even the greatest and most powerful company. Today, United Fruit exists only as yet another of those expired entries in the Boston Business Directory.
Chris Hartman is a Monitor contributor.